XRP Ledger to tighten permissioned token rules to attract institutional players 

XRP Ledger plans to tighten rules on who can hold permissioned, regulated tokens such as stablecoins or tokenized stocks. In an upgrade named fixCleanup3_5_0, which bundles four proposals, XRP Ledger intends to remove loopholes that currently allow unapproved users to hold regulated assets without issuer approval. 

For some tokenized stocks, issuers want to screen whoever is buying their tokens for compliance checks, including anti-money laundering (AML) and manipulation risks. As such, a permissioned environment allows issuers to run identity checks.

Until now, XRP Ledger has had ways to bypass this, which can derail onboarding of institutional players leveraging tokenized stocks and other regulated assets on the network. This is part of the chain’s push to advance and position itself for the tokenization boom. 

What’s next for the XRP Ledger proposal

The proposals were pushed out earlier this week. At the time of writing, the upgrade was yet to be merged into the main software, the next stage for validator consensus and potential adoption into the mainnet network. 

To advance to the next phase, the upgrade must get 80% validator support, or about 29 out of 35 trusted validators, for two weeks. 

Since the AI-flagged decade-old $90B risk to the network in September, the team has been actively scanning for flaws and vulnerabilities as part of continued hardening of the protocol. The advanced AI models have also elevated security risks to blockchains and digital systems. 

According to the XRP Ledger Foundation, the recent upgrade proposal is part of routine hardening of the protocol and not related to any security incident. 

So, will the proposal improve XRP Ledger ratings in the tokenization race?

XRP Ledger’s tokenized stocks traction

According to the RWA dashboard, XRP Ledger is the 10th largest network with $642.5M in tokenized assets. This is slightly below Base, which holds $650M of tokenized assets and ranks 9th. 

Interestingly, among the top 10, Base and XRP Ledger saw the largest growth in tokenized assets in the last 30 days. XRP Ledger’s value grew by 28% while Base’s traction increased by 69%. 

Overall, XRP Ledger is seeing traction on the tokenization front and wants to improve the underlying tech to advance the segment while ensuring compliance guardrails for institutional players. 

Final Summary

• XRP Ledger is eyeing an upgrade to restrict unauthorized users from holding regulated tokenized assets and stablecoins. 
• Network is ranked 10th in tokenized assets value with $642.5M, following a growth of 28% in October.